If the Fed buys $100,000 in U.S. government securities from a commercial bank, the bank now has an additional $100,000 of
A) total assets.
B) unplanned reserves.
C) actual reserves.
D) net worth.

Question

Quizplus · Accepted Answer

When the Fed buys government securities from a commercial bank, the bank's reserves increase by the amount of the purchase, in this case, $100,000. These reserves are part of the bank's actual reserves.

If the Fed Buys $100,000 in U